Understanding Bitcoin-Cloud Mining-Lesson 20

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Author : Bitconnect

Electricity Costs. This is a big variable by country and electricity provider. Mining gear consumes large quantities of power. Some countries subsidize power completely, some U.S states have cheaper power than others, many EU member states, and countries such as New Zealand have extremely high power costs. This puts people in cheaper electricity areas away from the equator at an advantage, such as China. Near the equator cooling must be taken into consideration. This requires research and in some cases shopping around for the best power deal to maximize profits, although in some countries it can be nearly impossible to profit due to electricity costs. If you wished to mine for a lottery without using much power, you could solo mine with a small piece of hardware with a negligible power consumption in hopes to solo-mine a block. Note, this does not apply to cloud mining or when you buy bitcoin online to invest. Upfront Hardware/Service Cost. This is your initial investment, varying with the exchange rate, and the age of the hardware you are getting and/or the purchased cloud mining power. New hardware is considerably more expensive. Buying the latest model or latest cloud mining power to suddenly have a new piece of hardware on the market introduced and having the value of your gear/service reduced plus an increase in difficulty from the new gear means you should time purchases of large investments carefully.

Mining for a few months and selling hardware at the right time before its price begins to fall can help. Some countries with high import taxes can further increase upfront hardware costs. Pre-Order Delivery Times. Pre-Ordered hardware can sometimes ship late. In this event the later the shipping the greater the loss of mining time while the difficulty is still rising in the meantime. The KNC Neptune delay, which was bought at a high price at bitcoins 2014 price peak only shipped after the price had crashed a few months later than promised, costing investors thousands who never to this day returned their investment. This does not apply to cloud mining. Hardware becoming obsolete. Hardware becoming obsolete can reduce its profitability to a point where it costs more to run than it earns in bitcoins. The machine can either be switched to solo mining for luck, or powered down and sold for what it is worth to recoup what costs you can. If you purchased a small amount of hashing power from a cloud provider, this amount of hashing power could if the difficulty rises high enough not even earn the cloud providers daily fee from the earnings, by which it is then no longer going to earn anything. If you have not returned your investment by this point, the money is lost. With hardware you can potentially resell it to recoup some cost. Conclusion. Based on the above factors, cloud mining solutions are a very high risk investment at best, even with a genuine company. Buying hardware is better but unless you very carefully plan when you buy your hardware even that can also land you in hot water.

A purchase of the latest generation just before the release of a new piece of hardware can reduce the probability of returning investments to zero. Cloud Mining services are typically not transparent, although renting can be more transparent than long term cloud mining investments. It is of a lower risk to purchase your own hardware, safe in the knowledge that you have a tangible asset you can resell. Failure of your mining hardware out of the short 90-day manufacturer’s warranty can leave you with a significant loss also. The ever rising difficulty means that to make profit you are better off buying bitcoins online or trading bitcoins at the right moment, have cheap electricity or cheap access to hardware, or mining altcoins and exchanging them to bitcoin, in particular LiteCoin with the high end LiteCoin mining hardware which based on my research stands a better chance of making a profit due to the stable difficulty of LiteCoin and price of LiteCoin in relation to bitcoin. Buying LiteCoin online can also be done in the same way as with bitcoin and it works in the same way. While not all cloud mining is an outright scam, the lack of transparency and the high chance of not returning your investment makes it a risk, and mining in and of itself is a high risk investment, be it through cloud mining or owning your own hardware, and one that should be approached with caution especially if large sums of money are involved. It should never be seen as a get rich quick scheme. As with any investment, do not invest what you cannot afford to lose. With that in mind, do your research carefully and happy mining.

Read more about Bitcoin and The BitClub Network at https://mypr.co.za/understanding-bitcoin-cloud-mining-lesson-19/.